RESTRICTED

Report No. TO-355a

This report was prepared for use within the Bank and its affiliated organizations.They do not accept responsibility for its accuracy or completeness. The report maynot be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

APPRAISAL OF A

NATIONAL HIGHWAY PROJECT

THAILAND

May 16, 1963

Department of Technical Operations

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Currency Equivalents

Free Exchange Rate (recent average)

Baht 20.80 = US$ 1.00Baht 1,00 - US$ 0.05Baht 1,000,000 = US$M8,100

Fiscal Year

October 1 to September 30

THAILAND

APPRAISAL OF A NATIONAL HIGHWAY PROJECT

Table of Contents

Page

SUYMARY i-ii

I. INTRODUCTION 1

II. BACKGROUND INFORPMTION 1-2

A. Geographic and Demographic 1B. Modes of Transportation 2

III. THE HIGHWAY SYSTEM 3-6

A. General Classification and Condition of Roads 3B. Highway Responsibilities and Management 3C. Growth and Characteristics of Vehicle Fleet 4D. Future Highway Development Plans 5

IV. THE PROJECT 6-14

A. General Description 6B. Project Road Description, Design, Execution

and Costs 7C. Highway Maintenance Requirements and Miscellaneous

Items 10D. Consulting Services and Costs 12E. Summary of Costs and Financing 13F. Loan Components and Probable Annual Disbursements 14

V. ECONOMIC JUSTIFICATION 14-19

A. General 14B. The Assessment of Economic Benefits 15C. The Project Roads 16D. Further Road Studies and Engineering 19

VI. CONCLUSIONS AND RECON7ENDATIONS 20

ANEXES

Annex A: Assessment of Economic Benefits

Annex B: Roads to be Studied and Engineered for Future Bank Consideration

Tables

1: The National Highway System, 1962

2: Design Standards for Highways

3: Proposed Organization for Department of Highways

4: Expenditures and Appropriations, Department of Highways, 1958-63

5: Motor Vehicle Registrations Composition and Growth

6: Proposed Eight-Year Highway Development

7: Tentative Bank Portion of Eight-Year Highway Development Program

8: Cost Estimate for Typical Road Construction

9: Estimated Costs of Construction

10: List of Maintenance Equipment Required

11: Estimated Costs of Engineering and Training

Map 1: Thailand: Physical and Political

Map 2: Thailand: National Highway System

ThIULND

APPRAISAL OF A 1NATIONAL HIGHWADY PROGRAM

SUM4kRY

i. The Government of the Kingdom of Thailand has requested the Banktsassistance in financing the following highway project:

a) the improvement of existing and the construction ofnew primary national roads totaling 628 km in length;

b) the purchase of mechanical equioment to improve andmodernize the highway maintenance organization;

c) the purchase of accounting machines, instruments,and other miscellaneous items of technical equip-ment;

d) consulting engineering services in connection withthe project, -nd the technical training of Thaiperson-nel.

ii. The total cost of the project has been estimated at about US$62.6million equivalent of which the foreign exchange costs total about US434.1inillion equivalent including an allowance for construction contingencies.A Bank loan of US035 million is proposed to cover the estimated foreign ex-chaange costs and to provide for possible further unforeseen contingencies.Tlis willbe the first Bank loan for highways in Thailand. The executingagency will be the Department of Highways of the Ministry of Communications.

iii. Cost estimates and the foreign component of costs are only approxi-mate; they will be checked in the early stages of the project by consultingengineers. Substantial deviations in the assumed foreign exchange costs arenot expected; however, arrangements have been discussed auring loan negotiationsfor adapting the proposed loan amount to revised estimates and for ensuring theadequate financing of the project.

iv. rhe registration of motor vehicles in Thailand has more than tripledover the past 10 years. The present trunk highway network, although fairlyextensive in length, is below desirable technical standards, with less than25% paved. Vehicle operating costs are high over the majority of roads.

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V. With a view to improving the countryts road network, the Governmentis embarking on an 8-Year Highway Development Program and has asked the Bankto consider financing a substantial part of the development program on a long-term basis. The part of the program presented to the Bank for considerationtotals some 1,662 km of road improvement and construction at a total cost ofapproximately US$110 million equivalent. The road works included in the presentproject constitute the first and most important phase of the program presentedto the Bank.

vi. Further Bank investment in subsequent phases of the highway develop-ment program has been tentatively discussed with the Government and would pro-vide for possible future loans totaling about US$30 - 35 million equivalent.

vii. The road works included in the proposed project are economicallysound and can be justified by the reduction in vehicle operating costs aloneover the improved roads compared with the existing roads. The justificationwould still be satisfactory if there were a substantial increase in construc-tion costs. Additional economic benefits will accrue from the stimulus toagricu'tural production.

viii. Consulting engineers, satisfactory to the Bank, will be retained bythe Government to undertake the design, contract documentation and supervisionof the 628 km of project works. Their services will also include the engineer-ing and economic studies of a further 1,034 km of roads with a view to possiblefuture B?nk financing as mentioned in paragraph (vi) above.

ix. Contracts for construction of the road works included in the projectwill be awarded on the basis of international coinpetitive bidding. The probableduration of the works will be about four years commencing early 1964.

x. The proposed loan includes an amount of US$6.8 million equivalent forthe purchase of new ilighway maintenance equipment and spare parts. Consultingengineers will be advising the Department of Highways on general reorganizationwith particular emphasis on highway maintenance.

xi. Agreement was reached during loan negotiations on the points detailedin paragraph 100 of the appraisal report. The project is suitable for a Bankloan of US$35 million equivalent with a 20-year term including a 5-year periodof grace.

THAILAND

APPRAISAL OF A NATIONAL HIGHWiAY PROJECT

I. INTRODUCTION

1. The Government of the Kingdom of Thailand has requested the Bank'sassistance in financing a highway project comprising the improvement and ex-pansion of the national road network, the purchase of field and office equip-ment, and the services of consulting engineers. The project is described ingreater detail in Section IV of this report. A Bank loan of USV,35 millionequivalent is pronosed to cover the estimated foreign exchange costs, andwiould be the first Bank loan for highways in Thailand.

2. The road wTorks included in the proposed project total 628 km andconstitute the first and most important phase of a larger highway developmentprogram presented by the Government to the Bank for consideration in July1962. The larger program provides for the improvement and construction ul-timately of seven roads totaling 1,662 km in length, with an estimated totalcost o-f annroximately USllO million, and in turn forms part of the Govern-ment's proposed eight-year highway development program commencing 1963 andestimated to cost around US'hIOO million equivalent.

3. This appraisal report is based on the findings of a Bank mission toThailand in July-August 1962, and upon material prepared by the Department ofHighi"ays and the National Economic Development Board of the Government follow-ing advice and assistance given by a previous Bank mission in 1961. Thepresent nroject details and the tentative phasing of the balance of the Bankportion of the development Drogram were confirmed in correspondence betweenthe Government and the Bank during December 1962.

II. BACKGROUND INFORTMATION

A) Geographic and Demographic

4. Thailand covers an area of approximately 510,000 km2 (almost as largeas France) between latitude 60 N and 200 N. It is bordered by Burma in thewest, Laos in the north, Cambodia in the east, and by the Gulf of Thailand andMalaya in the south (see Map 1).

5. Geographically, economically, and politically, Thailand is dividedinto four regions: Northern, Northeastern, Central and Southern. The Northernregion is generally characterized by mountain ranges running roughly north-south; it is rich in agricultural products, timber and minerals. The North-eastern region is a relatively flat plateau forming part of the catchment basinof the Hlekong river. Although largely underdeveloped it produces a substantialquantity of mixed agricultural products and livestock. The Central region in-cludes the wet lowland plains of the Chao Phya river and constitutes one ofthe major rice nroducing areas in the world. The Southern region includes themajor part of the isthmus linking Thailand with lMalaya, and produces largequantities of tin and rubber.

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6. Thailand's climate is generally tropical, but the uplands of the North-ern region enjoy a somewhat more temperate climate. There is a pronounced rainyseason between June and October throughout most of the country; road construc-tion, especially earthwork, is difficult during the height of the rainy season.

7. The present population of Thailand has been estimated at approximate-ly 28 million and is increasing at about 3% annually. Apart from a noticeableconcentration around Bangkok and the central plains, the population is fairlywell distributed throughout the country. About 85% of the wiorking populationis employed in agriculture.

B) Modes of Transportation

8. Few statistics are available to indicate the distribution of passengerand freight traffic between different modes of transportation. The State-ownedrailway and highway systems appear to carry the major share of traffic, theformer handling mostly long-haul bulk goods and the latter the shorter haul ofmiscellaneous commodities. A diversion of less-than-carload goods from rail tohighway has been increasingly noticeable from 1957.

9. Individual modes of transportation are already operating at a highcapacity, and lack of capacity in one mode cannot easily be compensated for byinereased use of other facilities. All modes of transportation appear in needof some improvement or expansion to meet future traffic requirements, but moreespecially the highway system.

10. The highway system will be described in detail later. Briefly, thenetwyork comprises about 9,000 km of trunk highways (of which only 2,500 km arepaved) and some 7,000 km of low standard intra-provincial and rural roads.MlIotor vehicles number 110,000, about half of which are trucks and buses.

11. The Thailand State Railway system consists of about 3,500 km of meter-gauge mainline track radiating from Bangkok and connecting with the Cambodianand Malayan rail systems. A six-year improvement program was started in 1961 toincrease the carrying capacity and operating efficiency of the railway. The pro-gram is scheduled for completion in 1966, and is being partially financed by aBank loan of US'`14.6 million (Loan No. 280-TH). The West German Government isassisting financially in the construction of 188 km of new line near Korat.

12. Thailand has an extensive inland waterways system of about 1,600 km inlength concentrated largely in the flat Central region of the country. Thismode of transnort is particularly suitable for the movement of bulk cargo suchas paddy, rice, petroleum products, timber and construction materials within thearea, where soil conditions would make road construction difficult and expensive.

13. Coastal shipping is used extensively along the 2,000 km coastline ofThailand, particularly in the southern part of the isthmus. The development ofa modern highwJay system is somewhat reducing the amount of general cargo trans-norted by coastal shipping, particularly from areas within convenient truck-haul distance of Bangkok.

14. The Government is aware of the need for effective transport coordina-tion, particularly between the competing road and rail systems. A TransportBoard has been established within the Ministry of Cormunications and some regu-latory measures have already been introduced with a view to providing an orderlyand coordinated development of the principal modes of transportation.

III. THE HIGHWAY SYSTEM

A. General Classification and Condition 9. Roads

15. A distinction is drawn betweef highways of national importance andprovincial highways, Responsibility for, the two classes is vested in dif-ferent Government authorities, the former in the Ministry of Communications,and the latter in the Ministry of Interior.

16. The national highway system is roughly sub-divided into a primaryand secondary system (see Map 2); a breakdown of the total length by regionsand type of surface is given in Table 1.

17. For design purposes, national highways are classified into fivetypes according to anticipated future traffic volumes (see Table 2). Onlyfew, however, of the present roads conform to these standards. About 75%of the national system is at present unpaved, a typical road having a narrowloose laterite surface, with poor alignment and weak timber bridges.

B. Higt2way Responsibilities end Management

18. The construction, improvement and maintenance of the national highwaysystem is the responsibility of the Department of Highways within the IvMinistryof Communications. Most highway construction work is undertaken by contract,some departmentally. Plainten.nce activities suffer from inadequate centralcontrol and coordination, a lack of trained engineers, insufficient modernmaintenance equipment, and too much activity in new construction. A reorgan-ization of the DepErtment is expected to commence in early 1963 and be com-pleted within a period of two years with the assistance of foreign consultants.The proposed scheme for reorganization is satisfactory and is indicated inTable 3.

19. Total annual expenditures of the Department of Highways, excludingfinancing by USAID, increased from a level in 1958 of around US$14 millionequivalent, which included USQt4.5 million for maintenance, to about US$25million equivalent in 1962, including US$5.6 million for maintenance (seeTable 4). The 1962 figure for highway expenditures represented about 6%-7%of the total Government budget. USAID funds expended on road and bridge con-struction averaged about US$8 million annually over the five years ending 1961,and are believed to have increased substantially in more recent years.

20. The Public Works Depcrtment (PWD) of the IJinistry of Interior is re-sponsible for the construction, improvement and maintenance of provincial roads,public buildings, wpter supply and other public works in the 71 provinces ofthe country. Past expenditure of the PIND on provincial roads and bridges isbelieved not to have exceeded about US$3-4 million equivalent annually overrecent few years. Maintenance of the provincial road network is extremelypoor or non-existent.

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21. A reorganization of the P'0D was recently instituted with the ultimateobject of creating nine regional highway centers throughout the country, eachwith its own equipment pool, workshops, warehouses, office buildings, etc. Onesuch center has been established at Khonkaen in the northeast and plans are inhand for establishing the next two centers, one at Songkhla in the south andthe other at Chiengmai in the north. The Government is currently preparing anapplication to the Bank for assistance in financing these two regional centers.Their establishment would complement the proposed national highway project byenabling the PWD to improve and expand the provincial road network in thevicinity of tlfo of the project roads.

22. The Irrigation Department of the Ministry of Agriculture constructslimited lengths of low standard service roads, which are usually open to thepublic, but whose primary function is to provide access for the operation andmaintenance of irrigation canals and headworks. Expenditures of the Departmenton this class of road are believed not to exceed about US$1-2 million equiva-lent annually.

C. Growth and Characteristics of Vehicle Fleet

23. Records of vehicle registration in Thailand indicate that the numberof vehicles has more than tripled in the past ten years (Table 5). At the endof 1961 the total number of vehicles registered in the country, excluding motorcycles and motor tricycles, was about 109,000, almost half of this number inthe Bangkok area. The present vehicle fleet is composed of about 51% cars, 12%buses and 37% trucks; more than three-quarters of the total nmmber of cars,however, is registered in the Bangkok area. The trend in composition over thepast ten years has been for cars to continue making up approximately one-halfof the total vehicle fleet, while buses have reduced proportionately and truckshave increased. Gross revenues from road-user taxes currently yield aboutUS$25 million equivalent annually, an amount substantially higher than roadmaintenance expenditures.

24. The present growth rate of the total vehicle fleet is about 9% perannuum. An estimated projection of the numbers of motor vehicles in differentclasses is indicated in Table 5, conservatively resulting in a doubling of thevehicle fleet in the next 10-year period.

25. Trunk roads in provincial areas carry a high proportion of truck andbus traffic, normally ranging from 60% to 90% of the average daily traffic.Trucks are typically of the two or three-axle type with capacities of about5 to 7 tons, and are often adapted for carrying passengers in addition tofreight. Roads in the vicinities of towns and villages also carry large num-bers of bicycles.

26. Satisfactory legislation for the regulation of motor vehicle weightsand dimensions w.s introduced in 1960. Dual-tired axle loads are limited toeight metric tons and vehicle widths to 2.50 meters. Some initial difficulties,however, are being experienced in implermenting the regulations. So far, threecheck weighing stations have been set up near Bangkok and more are proposedthroughout the country in the near future to ensure better implementation.

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27. There is a strong current trend towards greater Governmental controlof highway transportation in Thailand, At present, however, trucking andpassenger transport are still carried out predominantly by private companiesor by small independent owner-operators usually with only one or two vehicles,and subject to no regulption except vehicle registretion. Keen competitionfor freight and passengers often results in an inadequate level of transportcharges, in turn reflecting in low standards of vehicle maintenance and con-sequential poor and unreliable service to the shipper or traveler.

28. With a view to controlling and improving public trucking facilities,the Government introduced regulatory measures at the end of 1962 which included:(i) a comprehensive freight tariff schedule intended to cover true costs, (ii)the proviso that trucking companies should own not less than ten trucks, and(iii) a requirement that truckers should apply to the Ministry of Communica-tions for a license to operate over any particular route.

29. There are two well-organized motor transport companies based inBangkok, the Express Transportation Organization (ETO) and the TransportCompcny (TC), both Government-owned autonomous agencies. The Government wasadvised recently on their reorganization and operation by foreign transportexperts provided under the auspices of the Colombo Plan and the InternationalLabor Office (ILO). The ETO was established in 1953; it operates a publictrucking service with about 500 vehicles, a few buses, an inland waterwayservice, gasoline stations, a printing press, and an insurance business. TheETO has a monopoly on certain trucking activities, for example: cargo pick-upand delivery at 96 railway stetions; through freight to Laos; transportationof tobacco and cigarettes for the Government Tobacco Monopoly, etc. Otherpublic truckers may participate in these activities only under contract withETO and upon payment of a fee.

30. The Transport Company (TO) was established by the Government as earlyas 1932 for the stated purpose of providing intercity highway passenger trans-portation and controlling bus fares throughout the country. Present fares,charged in accordance with a published tariff, are about the same as thirdclass rail fares. The activities of the TC have expanded considerably sinceits inception; passenger transport facilities in thirty provinces around Bang-kok have now been nationalized under the company and there are indications ofan even wider nationalization soon to come.

D. Future Highway Development Plans

31. The Depsrtment of Highways, in cooperation with the Bureau of Budgetand the N2tional Economic Development Board, has prepared an overall 8-yearnational highway development program commencing 1963 which provides for theimprovement of about [,000 km of existing highway and the construction of 1,500km of new highways at a total cost of about US$h00 million. The program wasformally approved by the Government in July 1962. Although possibly too am-bitious, particularly with regard to the 8-year estimated completion period,it nevertheless constitutes the first comprehensive, long-range, highway devel-opment plan in Thailand designed to meet the country's future economic, polit-ical, social and military recluirerrients.

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32. A ten to twelve year period instead of eight for completion of theprogram would be more realistic and would require an average annual construc-tion expenditure of about US$30-36 million equiivalent. This annual level ofhighway construction expenditure, although higher than that of the Departmentof Highways during recent years, is considered to be within the capacity ofpotentially available technical resources for the following reasons: (i) aproposed reorganization of the Department should provide for relatively greaterefficiency and higher capacity; (ii) a technical training program is expectedto increase substantially the number of skilled personnel; (iii) consultingengineering firms will be employed to undertake the bulk of the technicalstudies, design and supervision of the program, thus relieving to some extentthe work load on the Department; (iv) construction forces in Thailand are ex-pected to be strengthened by widely publicizing parts of the program for bid-ding on an international basis.

33. A summary of the highway development program with estimated costs andanticipated sources of funds is given in Table 6. It will be noted thatforeign lending agencies are expected to play a major role in financing theprogram. The Bank is being requested to consider the financing of 1,660 kmof road construction or improvement totaling about US$110 million over aperiod of some eight years (see Table 7). The present project constitutesthe first phase of the suggested Bank program and includes the engineering andconstruction of 628 km of road and the engineering of the balance with a viewto poss-ble further Bank lending. Further Bank investment in subsequentphases of the highway development program has been tenatively discussed withthe Government and would provide for possible future loans totaling aboutUS$30 - 35 million equivalent.

IV. THE PROJECT

A. General Description

3h. The project comprises the following:

a) The improvement of existing and the constructionof new sections of three national primary highwaystotaling 628 km; the estimated cost of the work isUS$46.9 million equivalent of which the foreigncomponent is US$21.1 million. The foreign costs ofconsulting services in connection with this work willbe approximately US$3.0 million equivalent.

b) The purchase of mechanical equipment to improve andmodernize the national highway maintenance organi-zation, involving a foreign currency outlay ofUS$6.8 million equivalent.

c) The purchase of accounting machines, instrumentsand other miscellaneous items of technical equip-ment, at a foreign cost of US$0.3 million equivalent.

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d) Other consulting engineering services, includingthe engineering and economic studies of a further1,034 kmn of roads (see Map 2) with a view to possiblefuture Bank-financing, and the technical trainingabroad of selected Thai personnel. The foreigncosts are estimated at US$2.9 million equivalent.

B. Project Road Description, Design, Execution, and Costs

35. The project provides for constructing or improving the followingthree roads to the standards indicated:

Class Length(Table 2) (km)

1) Chiengmai-Lampoon-Lampang I, II 1052) Songkhla-Klong Ngae-Naradhiwat I, II 2573) Nakorn Pathom-.Huahin-Prajuab I, II 266

628

Chiengmai - Lampang Highway

36. Chiengmai, with a population of about 100,000, is the secondlargest city in Thailand, and an important agricultural, commercial andcultural center. It is separated from the proposed and partially completedinternational trunk route leading northward from Bangkok throuLgh Lampang andChiengmai into Burma by two parallel mountain ranges running roughly north-south. The project road will connect Chiengmai with the international trunkroad by the shortest practical route.

37. The existing road between Chiengmai and Lampoon, 27 Ion in length, isnarrow, poorly aligned and heavily built up on both sides. Under the project,it will be widened and improved to Class I standard and will be re-locatedentirely to by-pass heavily congested villages. The section from Lampoon toLampang is of entirely new construction, 78 km in length, crossing the twomountain ranges in an east-westerly direction to make a connection with theinternational trunk road at Lampang. It will be built to Class II standards.Construction of a 16 Ikn length eastwards from Lampoon is now nearing completionby the Department of Highways' own forces; the balance of the works will becompleted by contract.

Songkhla - Naradhiwat Highway

38. Songkhla, Pattani and Naradhiwat are three thriving community centersand seaports in southern Thailand which lack good road facilities. The exist-ing main road linking these ports and serving parts of their hinterlands isnarrow, poorly aligned, and for the most part, unsurfaced or surfaced onlywith laterite. A load limit of six tons for trucks is enforced over most ofits length. Construction and improvement work now in progress with the Depart-mentfs own forces on a 30 Im section of road would be phased out and completedby contract if a Bank loan were forthcoming. Under a USAID-financed project,local contractors are replacing old wooden bridges with modern reinforcedstructures over a 204 km length of the road. The 53 Im section south frs;nSonghkla carries ovjer 1.000 vehicles per day and will be built to Class Istandards) the remaining length to Class II staLdards 0

Nakorn Pathom - Prajuab Highway

39. The existing highway linking Bangkok with areas to the southwest isinadequate for the heavy traffic using it, particularly at its northern end.Improvement to the 55 km section from Bangkok to Nakorn Pathom is expectedto commence in 1963 with financial assistance from the U.S. The section ofhighway included in the project extends southward from Nakorn Pathom, a dis-tance of 266 km over low flat terrain. Old timber bridges have recently beenreplaced with modern concrete structures under a USAID project, but the earth-works, roadway width, and surfacing are still substandard.

40. The project provides for improving the 175 km length south from NakornPathom to Class I standard and the following 91 km down to Prajuab to Class IIstandard. Further studies of the cost and justification for extending the roadimprovement beyond Prajuab are also included in the project with a view to pos-sible Bank-financing at a later stage.

Design and Execution

41. Available engineering studies are limited and only of a preliminarynature for the bulk of the road improvement work included in the project.Designs in some detail, however, were prepared originally for the new construc-tion work between Lampoon-Lampang and for a part of the Songkhla road, totalingabout 100 km. These designs need thorough review and revision to adapt themto the new highway design standards introduced in 1962 (see Table 2).

42. The project studies and designs so far have been made by the Depart-ment of Highways with some assistance from a foreign consulting firm whose con-tract has now lapsed. The Department intends to appoint new consulting engi-neers to undertake the revision and completion of designs, the preparation ofbidding documents, and the supervision of project works.

43. The proposed design standards of Table (2) are generally satisfactorybut somewhat extravagant if the so-called "desirable" standards are used forthe traffic volumes indicated in the respective classes. The Department hasagreed to construct the project roads to the lower or "Minimum" standards, withthe earthworks of Class II roads being built to "desirable" widths in order tofacilitate future pavement widening as traffic increases. These standardsare considered adequate for the traffic volumes forecast; they were con-firmed during loan negotiations.

44. Bidding and contract documentation for the Bank-financed constructionwould be similar to that currently in use on highway works financed by USAIDunder the supervision of U.S. consulting engineers. The documentation is bas-ically satisfactory; details would be subject to approval by the Bank prior toadvertising for bids. Bidding would be on a unit price basis and open to in-ternational competition; the approximate size of individual contracts wasdiscussed during negotiations with a view to ensuring their being sufficientlyattractive to foreign construction companies. The construction period is ex-pected to be about four years, commencing early 1964.

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45. There are about thirteen qualified domestic bridge construction com-panies in Thailand capable of both designing and constructing complicatedbridge structures. Most of these firms developed over the past six or sevenyears since the inception of the USAID bridge replacement program. Aboutfive or six domestic highway construction companies have the capacity and ex-perience to undertake major works similar to those included in the project.Three foreign contracting companies are currently working on highways in Thai-land. iHore foreign companies will be needed, however, to undertake the high-way development program; it would be beneficial to the domestic constructionindustry if these foreign companies were to work in joint venture with thesmaller local counterparts.

Construction Cost Estimates and Foreign Component

46. The Department's cost estimates for highway construction and improve-ment are only preliminary. They are considered sufficiently accurate for thepurpose of commencing lending operations for highway financing in Thailandsince a) ample contingency allowances have been included in the cost of theproject, and b) an undertaking has been sought from the Government to financeany shortfall in both local and foreign currency cost. As will be shown later,the economic justification is ample enough to allow for a substantial increasein construction cost without prejudicing the justification.

47. Estimates of the principal quantities of work to be executed havebeen based upon original engineering drawings for new construction (with someallowance for the changes in design standards) and upon recently compiled roadinventories for the imDrovement of existing roads. The quantities for suchitems as sub-base, base and paving lend themselves to fairly accurate estima-tion. These items account for about 60% of the estimated project cost net ofcontingencies. A further possible variable has been virtually eliminated,since major bridges have already been completed on 470 km, or 75% of the proj-ect road length.

48. The unit 'orices used in estimating are realistic; they are based upon,but slightly higher than, the average unit )rices recently submitted by domesticand foreign construction companies for similw- highway work in Thailand.

49. A typical construction cost estimate for a section of project roadis given in Table 8. Incorporated in the cost estimates are provisions of 10%on the principal work items for such minor miscellaneous work as land clearing,minor betterments, traffic signs, etc., and also a contingency allowance of25% for possible additional quantities of trork or other cost increases. Nospecific allowance has been included for escalation or possible inflationarytrends during the construction period since general cost indices have beenre'sonably stable in Thailand over the past 5 years.

50. Construction costs per km for highway improvement in the flat androlling terrain traversed by the major length of the project roads averagesaround US,60,COO, including contingencies but excluding the cost of engineeringand supervision. The average cost of newr construction over the difficult moun-tainous Lampoon - Lampang section is estimated at about US:200,000 per km,almost half of which is accounted for in heavy earthworks.

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51. No detailed study has yet been made of the foreign component of costof highway construction in Thailand. Construction equipment, fuel, steel,asphalt, explosives and many other important highway construction elements mustbe imported; only cement is now produced locally in sufficient quantities tomeet the country's requirements. Inquiries among highway contractors and con-sulting engineers in Thailand, and a comparison with similar conditions inother countries, suggest that an appropriate foreign component of cost of con-struction would be somewhat more than 50% if executed by foreign contractorsand about 40% by domestic companies. It has been assumed that from one-halfto two-thirds of the work would be carried out by foreign companies, and acorresponding proportion of 45% of total cost has been tentatively used inassessing foreign currency requirements.

52. On the above basis, the foreign component of construction cost forthe three project roads is US$21.1 million equivalent, including the contin-gency allowance. Estimates of total construction cost with a breakdown intoprobable annual local and foreign currency requirements are given in Table 9.The annual requirements assume construction work to commence early in 196h,the intervening period being taken up with engineering and bidding of the mostimportant sections of road.

53. As mentioned above, the loan amount has been based upon constructioncost estimates and a foreign component of construction cost which are only ap-proximate. These two factors will be determined more accurately by the con-sulting engineers in the early stages of the project. It was emphasized tothe Government delegation during loan negotiations that if after a check bythe consultants of cost estimates and foreign component:

a) the proposed loan amount proves too large, then thesurplus amount either be cancelled or, with the Bank'sapproval, applied to a subsequent phase of highwayconstruction; and

b) if the proposed loan amount proves too small, then thepercentage of Bank participation in project expendituresshall be reduced accordingly and the Government shallmake good arny shortfall in foreign or local currency asrequired.

C. Highway M4aintenance Requirements, and 1iscellaneous Items

54. Highway maintenance operations in Thailand have never been highlymechanized; the maintenance equipment presently available is mostly old andinefficient in operation. The purchase of US$6.8 million of new maintenanceequipment and spare parts (see Table 10) is included in the loan amount forthe purpose of replacing existing itemis of old equipment and mechanizing main-tenance operations to a higher degree. Procurement procedures were discussedand agreed during loan negotiations.

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55. Field forces of the Department of Highways maintain the nationalnetwork and also engage in some new construction and improvement. They areorganized into about 50 Districts which in turn are grouped into 12 FieldDivisions. Technical and financial supervision of the Field Divisions isonly loosely exercised through a central I1aintenance Division in Bangkok.Central Workshop and Equipment Divisions in Bangkok undertake major over-hauls of equipment for those Field Divisions not having adequate repairfacilities of their own.

56. A proposed reorganization of the Department over the next twTo tothree years with the advice of consulting experts is expected to correct thepresent lack of headquarter control and guidance. Field Divisions willgradually withdraw from all construction work and will concentrate upon high-way maintenance. Surplus heavy road construction equipment, unsuitable formaintenance, will be made available to contracting companies.

57. With little change, the existing field organization forms a suitablebasis for developing the highvay maintenance effort of the Department. Thereare already small workshops for performing routine servicing of equipment andsimple mechanical repairs in each Field District; ten of the twelve FieldDivisions have more substantial and better equipped workshops, three of Tihichare capable of handling heavy repairs of construction and maintenance equip-ment. U.S. aid funds amounting to almost US7'200,000 have been expended onmechanic's hand tools and shop machinery during recent years. An effort hasalso been made to initiate a training program for maintenance engineers,mechanics, operators and supervisory personnel with the advice of the Depart-mentts previous consulting engineers.

58. The Department is in the process of appointing competent consultingengineers acceptable to the Bank to help draw up and implement an adequatefuture highway maintenance program. The consultants' scope of work will in-clude advice on organizing Ilaintenance and Equipment Divisions within theDepartment, a review of and recommendations for improving present maintenanceprocedures, and the continuation of the training program for personnel. Thiswork forms part of the general consulting services directed toward reorgan-izing the whole Department and referred to again in para 63 below.

59. The Government is fully cognizant of the need for an increasedmaintenance effort if the full benefit of an improved highway network is tobe realized. This is reflected in the planned future allocations to highwaymaintenance by the Budget Bureau. Past expenditures and planned operationalbudget allocations show a rise from the level of $500-600 equivalent per kil-ometer of road maintained during the past few years to around ^1,000 per kil-ometer in five years' time. The relatively high increase is partly accountedfor by allowances for deferred maintenance and betterments.

6o. Included in the loan amount is the sum of US"300,000 equivalent forthe purchase of mechanized accounting machines to improve the present ineffi-cient manual methods of budget control, contracting, warehouse and cost ac-counting, and to provide also for the purchase of surveying and other tech-nical equipment.

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D. Consulting Services and Costs

61. Consulting engineers were assisting the Department of Highways from1959 under an agreeraent with the U. S. Government. The engineering contractwas allowed to lapse in mid-1962. The scope of work covered advice and assist-ance to the Department in planning a national highway system compatible withthe economic needs of the country. Only a few improvements are noticeablefrom thlese services, however--mainly in the fields of soil mechanics, equip-ment repair and servicing, and with some slight improvement in planning opera-tions. It is desirable that consulting engineering advisory services be con-tinued along similar but more effective lines.

62. In 1962, under the auspices of USAID, a U. S. consulting firm, PublicAdministration Service (PAS), made a study of the organization and administra-tion of the Department of Highways with particular reference to the financialand administrative aspects. The PAS report contains many useful recommlenda-tions for improving highway management by the Department, and could be acceptedas a basis for introducing such improvements as are desirable in connectionwith Bank lending to Thailand for highways. The report proposes in essence,the institution of three Deputy Directorates of Administration, Engineering,and Operations (see Table 3).

63. USAID has contracted and will finance the servicesof PAS for aninitial period of two years commencing January 1963 to advise on the organiza-tion of the Deputy Directorate of Administration. The Department will appointa further conpetent consulting engineering firrn, acceptable to the Bank, tocomplement the services of PAS and advise on the organization of the DeputyDirectorates of Engineering and Operations, with particular enphasis on high-way maintenance. The Government has requested the Bank to assist in financingthe cost of such services. In liaison with USAID, the Bank has already assist-ed the Government in drawing up suitable terms of reference. During loan nego-tiations, it was confirmed that a reorganization of the Department of IHighlwayswill be carried out along the lines of the PAS recommendations.

64. The Department proposes appointing further consulting engineersacceptable to the Bank to undertake highway studies, design, documentation, andthe supervision of construction work included in the project; the Bank hasalso assisted in drawing up suitable terms of reference for this work. Sub-sequent phases of any Bank financing for highway construction in Thailand, wouldbe decided after consideration of the interim engineering and economic studiesof the five additional sections of road to be carried out under the presentproject (see Annex B).

65. The sum of US$5.9 million equivalent has been included in the loanamount to cover the estirnated foreign costs of the various engineering servicesdescribed, and also to provide for the technical training outside Thailand ofselected local personnel, at an approximate foreign cost of about USUl00,000equivalent. The latter item has been included at the request of the Govern-ment and indicates an awareness of the greater future need for properly quali-fied and trained Thai engineers in the implementation of its highway develop-ment program. It is felt that such a training program will be useful andshould be encouraged. The total sumfor engineering and training is composedof the following items;

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(i) US$3.0 million equivalent for the studies, engineeringand supervision of construction and improvement of thethree project roads (totaling 628 km and estimated tocost US$46.9 million) included in the first phase ofthe program (reference para 42);

(ii) US$2.3 million equivalent for the studies, engineer-ing and contract documentation for a further 1034 kmroads (estim,ated at $53.8 million) to be constructedin subsequent phases of the program (reference para 64);

(iii) US$0.5 million equivalent for a firm of consulting en-gineers to advise the Department of Highways for aninitial two-year period in its reorganization program,with particular emphasis on the development of anefficient highway maintenance organization (referencepara 63);

(iv) US$100,000 equivalent to finance the cost of sendingselected Thai engineering graduates abroad for tech-nical training courses with approved State Highwayorganizations in Europe or the U.S.A.

66. The costs of engineering services are only approximate; they havebeen assessed mainly on a percentage of construction cost basis and checkedroughly against anticipated man-months of work required. They are comparablewith the cost of similar work and are considered reasonable. For details anda breakdown into annual amounts see Table 11.

E. Summary of Costs and Financing

67. A summary of the project costs is given below:

US$ million equivalentTotal Local Foreign

1) Road construction andimprovement 46.9 25.8 21.1

2) Road maintenance equipment 6.8 1/ 6.83) Accounting machines,

instruments, etc. 0.3 - 0.34) Engineering services and

training 8.6 2.7 5.9

TOTAL: 62.6 28.5 1/

1/ Planned allocations to the Department's operational budget for highwaymaintenance 1963 through 1966 total approximately US$34 million equivalent.

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68. The foreign costs of the project constitute the subject of theGovernmentts application to the Bank for financing. The local costs of theproject, including construction, maintenance and engineering, would be fi-nanced from regular annual budget appropriations to the Department of High-ways. No difficulties are envisaged, and an assurance of the prompt applica-tion of funds and other resources to the project was given during loannegotiations.

F. Loan Components and Probable Annual Disbursements

69. The proposed loan would provide for financing the following items,with an appropriate additional allowance for unforeseen contingencies:

US$ million equivalent

1) Road construction and improvement 21.12) Road maintenance equipment 6.83) Accounting machines, instruments, etc. 0.34) Engineering services and training 5.95) Unallocated contingency allowance 1/.9

TOTAL 35.O

1/ An allowance applicable to any item and additional to the 25%contingency allowance included in item 1).

70. Assuming the loan to be declared effective in the first half of1963, the annual disbursement rate would probably be as follows:

1963 1964 1965 1966 1967 Total3.6- 9.7 r79 7.1 5.9 35.0 $ million

V. ECONOMIC JUSTIFICATION

A. General

71. Over the ten years ending 1960, the annual increase in Thailand'sGross National Product was about 5% at constant prices; there is evidence ofa somewhat higher growth rate in more recent years. The country's presentprincipal export commodities are rice, rubber and tin.

72. The index (1953 - 100) of total agricultural production, includingforestries and fisherires, has increased by about 50% over the past ten years;spectacular increases have taken place in the production of maize, cassava,and kenaf (jute), while future prospects appear good for increased rubber out-put. The value of manufactured goods and mining products has also shown asteady increase over the past five years, while over the same period the valueof private capital invested in construction increased by about 50%.

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73. The economy is expected to continue expanding at a high rate andwill create even greater demands on existing transportation facilities. Thereare grounds to believe that demands for highway transportation are increasingat a more rapid rate than for alternative modes, the principal of which arerail and inland waterway.

74. The proposed project represents a major effort on the part of theThai Government to make good the deficiencies in the country's highway facil-ities. The three roads to be constructed or improved under the project areconsidered by the Government to be among those of highest priority in con-tributing to the economic and social integration of the country.

B. The Assessment of Economic Benefits

75. The benefits accruing to the national economy from the constructionor improvement of the project roads are many and varied. They include, amongothers: increased output and improved quality in agriculture and industry;the opening up of new areas for population settlement; the reduction in trans-portation costs, travel time, and accident rates; the longer life and quickerturn-around of motor vehicles resulting in greater usage of the vehicle fleet;the social integration of isolated communities, particularly in the south nearthe Malayan border; facilitating administration, and a general broadening ofthe economic and social horizons of the population.

76. General qualitative impressions on the economic justification of theproject have been confirmed by comparing those benefits most easily quantifi-able over some future period with the proposed capitel investment in each road.The two principal benefits which have been considered are the savings in trans-portation costs and the value of increased agricultural production stimulatedby the project works. Available basic data are scanty but permit a reasonableassessment of transportation benefits; agricultural benefits are more difficultto assess.

77. Estimated reductions in vehicle operating cost range from about 18%to about 26% after completion of the project works. Conservative estimates oftraffic growth generate sufficient benefits from reduced vehicle operatingcosts alone to provide satisfactory returns on invested capital over theassumed economic lives of the project roads. Part I of Annex A indicates themethod of comparing the present values of vehicle operating savings with totalcapital investment, and includes a summary of the basic data used.

78. Because of the approximate nature of the construction cost estimates,further economic analyses have been made to check the effect of increased costs.If the construction contingency allowance is increased from 25% to 50%, therate of return from savings in vehicle operating costs alone is still satis-factory for all project road improvements, although only marginal at around7%-8% for the Chiengmai-Lampoon section. However, additional benefits fromreduced accidents, property damage and travel time for production workers,would satisfactorily enhance the justification for this section, which is nowheavily built-up and congested wgith cyclists and pedestrians.

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79. Supplemental benefits deriving from the stimulus to agriculturalproduction upon completion of the project roads contribute further to theireconomic justification. Part II of Annex A gives an indication of the esti-mated additional area brought under crop within a period of 8-10 years aftercompletion of the project roads. Although the project investment is not theonly investment required for a full realization of the expected increases inagricultural production, these increases are dependent to some extent, uponadequate trunk highways through the regions concerned.

C. The Project Roads

Chiengmai-Lampoon-Lampang Highway

80. The area around Chiengmai supports a higher concentration of personsper arable hectare than any other part of the country. The relative isolationof the community from the rest of the country because of inadequate transpor-tation facilities has tended to deprive the people of the marketing opportuni-ties existing outside the region and has also hindered the development of in-dustry in the area. In addition to producing typical upland crops such asvegetables, fruits and tobacco, the immediate service area of the highway isone of the most important centers of livestock in the country, accounting fornearly one fifth of the pig production. The forests of this region also havelarge timber resources including teak.

81. The proposed 27 Im highway improvement between Chiengmai and Lampoontraverses a fertile river valley which is well-developed; the 78 km sectionbetween Lampoon and Lampang crosses mostly mountainous terrain with someundeveloped fertile valleys betwqeen high mountain ridges. In addition toserving these potentially productive agricultural areas, the new road sectionwould provide a more convenient and economic connection with the internationaltrunk route running nortlhwards from Bangkok to the northern provinces andBurma. It would eliminate the necessity of traversing the extremely diffi-cult mountainous terrain on the presently existing track via Thern, the im-provement of which to satisfactory standards is impracticable within reasonablecost limits.

82. The railway from Bangkok terminates at Chiengmai, running betweenLampang and Lampoon although on a different alignment from the proposed high-way. The railway in this section has many steep grades and sharp curves,making operating conditions difficult and restricting the size of trains.Improvement of the existing alignment would be difficult and costly, and nomajor investment in this respect is proposed in the State Railway's 6-yearImprovement Program, 1961 - 1966. Construction of the highway would helpmeet the growing and diversified transportation requirements of the region.It is likely that the railway would retain most of its present category oflong-haul bulk freight originating in the area, such as lumber, rice, crushedstone, charcoal, sugar, cement, etc., while the more flexible highway facilityis expected to attract traffic in soft fruit, short-haul freight and passengers,in addition to generating traffic from new activities such as upland cropping.An important social and administrative benefit would be a closer integrationthan now exists of the three large population centers of Chiengmai, Lampoonand Lampang.

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83. The average traffic volume in 1962 on the Chiengmai-Lampoon sectionof road was 670 vehicles a day, about 60% of which were trucks and buses. Nor-mal traffic has been assumed to grow at a declining annual rate which would re-sult in a doubling of traffic volume over the next ten years--a reasonableassumption for a region with such high development potential. Savings on ve-hicle operating costs of about 18% are expected after completion of the im-provement and are alone sufficient to provide a return of about 9%, on thetotal investment in the road, including the cost of land, engineering, andinterest during construction (see Annex A).

8h. Construction of the new 78 km Lampoon-Lampang section of road isjustified as an essential link in the development of Thailand's modern high_way system. It will comrlement the existing railway facility and willresult in a closer integration than now exists of large and important commu-nity centers, in addition to facilitating the exploitation of new agriculturaland forest lands. It is reasonable to expect that about 300 vehicles per daywill use the road immediately after opening. A meaningful quantitative analy-sis of the resulting economic benefits from this road section is not possiblewith available statistical data and the justification has therefore been basedmore upon a broad qualitative judgment.

Songkhla-Naradhiwat Highway

85. This project road, 255 km in length, joins three important towns andseaports, namely, Songkhla, Pattani and Naradhiwat. Its service area includesthe four largest rubber producing provinces of the country, which in themselvesaccount for almost two-thirds of the country's total rubber production. Otherproducts of the area are fruit, coconut, rice and fish.

86. Almost one million people live within 10 km of the existing road,only half of which is open to traffic throughout the year. The improvementof the existing road and its completion to all-weather standards would greatlyfacilitate the movement of commodities between the ports and their hinterlands,thereby contributing toward reduced production costs of agricultural cornmodi-ties, particularly of rubber, from within the area. Two irrigation projectshave recently been completed in the Pattani province and others are under wayin the provinces of Songkhla and Naradhiwat. Improvement and expansion of thefeeder-road system in the Songkhla area is now under active consideration.Completion of these schemes will substantially increase the demand for bettertrunk highway facilities. The existing railway in the south does not servethe area traversed by the project road except near Songkhla.

87. A re-planting program for rubber is already underway in the area.This program, together with the expansion of new planting stimulated by theconstruction of the project road and proposed feeder-roads is likely to re-sult in a doubling of rubber output in about 15 years' time from the fourprovinces served; further details are given in Annex A.

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88. Traffic volumes in 1962 on the existing road between Songkhla andKlong Ngae ranged from about 1,200 to 800 vehicles per day, about 55% of whichwere heavy trucks and buses. The remainder of the road carried traffic rang-ing from about 360 to 220 vehicles per day. Average savings of about 26% invehicle onerating costs are expected after completion of the project road im-provement. A modest traffic growth over the assumed economic life of the roadwill r-sult in a return on total capital investment of about 15% from savingsin vehicle operating costs alone (see Annex A). Supplemental agriculturalbenefits, mainly from increased rubber output, provide additional justification.

Nakorn Pathom - Prajuab HighTray

89. The Government places high priority in improving the highway connec-tion between Bangkok and the southern region of Thailand. Improvement of the55 km section between Bangkok and Nakorn Pathom will be commenced shortly withthe financial assist-'nce of USAID. The project provides for a continuation ofthe high-Tay improvement southw-ard from Nakorn Rathom for 266 kE in the firstphase of Bank-financed operations.

90. The region is presently served by both road and rail systems whichrun rou ghly parallel for about 500 km south from Bangkok. In earlier times,goods and passenger traffic moved almost solely by rail, and consequently thelarger community centers are all located at fairly regular intervals alongthe railway. The road system appears to have developed essentially as a seriesof feeders to these railheads, the feeders ultimately becoming connected attheir extremities to form a continous route. As highway transport developedand became more efficient, rail transport gradually gave way to competitivetruck and bus services over an ever expanding area from Bangkok as center.

91. It is significant that although alternative rail transport is avail-able, even the present poor road facility carries traffic volumes (80% of whichare trucks and buses) ranging gradually down from about 1,300 vehicles a day100 km from Bangkok to about 400 vehicles a day near Prajuab, 300 km fromBangkok. A large proportion of this traffic is through traffic to or fromBangkok, indicating the high demand for a trunk road facility in addition toa rail facility within an approximate radius of 300 km from Bangkok. NearDrajuab and further south, the highway traffic pattern changes, with much lessthrough traffic but with a marked build-up near railheads, indicating an in-creasing preference for rail transport beyond this approximate radius at thepresent time.

92. The project road between Nakorn Pathom and Prajuab (and also thealternative rail facility) is occasionally flooded and impassable over low-lying sections during the rainy season, causing delays of up to three or fourdays. The project works provide for raising the road in these sections andgenerally strengthening and widening the pavement and earthworks. Savings inroad vehicle operating costs of at least 18% are expected after improvement.These savings applied to projected traffic over the useful economic life ofthe road would alone provide a return of about 17% on total investment (seeAnnex A).

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93. In December 1962, the Bank loaned US$3.4 million to the Governmentto assist in financing an irrigation project near Petchburi, with the primeobjective of increasing the output of paddy, bananas, fruit and vegetables.The bulk of this produce will probably be transported over the project roadfor absorption in the Bangkok market or for export. The proposed road im-provement will further increase the benefits deriving from the irrigationproject, in addition to providing an incentive for greater agriculturalactivity in other parts of its service area (see Annex A).

D. Further Road Studies and Engineering

94. In addition to the three sections of road reviewed-above, the pro-posed project includes the field survey, engineering studies, design andpreparation of bidding documents by consulting engineers for five other roadsections totaling 1,034 km in length. All the roads are open to traffic, al-though some for only part of the year; the necessary works generally involveimprovement of the existing road to appropriate standards with the possiblerelocation of some sections.

95. The roads are considered by the Government to have a high priorityand are all proposed for construction in the 8-year Highway Development Pro-gram. The consulting engineers would prepare interim reports, including allrelevant economic and cost data, which would be presented to the Bank forconsideration in connection with the possible financing of subsequent phasesof the highway program.

96. Scarcity of statistical data at present precludes anything morethan a broad qualitative judgment to be made concerning the economic justifica-tion for individual road investment. Rough estimates of construction costsare given in Table 6, and a brief description of each road with a summary ofagricultural and traffic data in Annex B. A review of these data, supportedby field inspections of most of the roads, indicates reasonable prospects oftheir suitability for future Bank financing, and justifies their inclusion inthe project for further study and design.

97. In view of the scarcity of statistical data and of the importanceof such data in determining priorities of construction within the 8-yearhighway development program and in facilitating further Bank lending opera-tions, assurances were sought from the Government during negotiations thatadequate arrangements would be made within the Department of Highways forthe collection, processing and recording of statistics relevant to the economicand technical aspects of the highway development program. The Governmentwill be assisted in developing such arrangements by the consultants referredto in paragraphs 63 and 64.

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VI. CONCLUSIONS AND REOMIYENDATIONS

98. Although engineering is only preliminary and cost estimates approxi-mate, the project is considered suitable for commencing Bank lending opera-tions for highways in Thailand. No serious deviations are expected from theestimates presented in the appraisal report but adequate measures for adjust-ing to any such deviations and for ensuring adequate project financing werediscussed during loan negotiations.

99. The project is economically justified from the resulting reductionin vehicle operating costs over the improved roads; additional economic bene-fits will accrue from the stimulus to agricultural production. The justifica-tion is still satisfactonr with an allowance for substantial increases in thecost estimates. An important social and administrative aspect of some of theproject roads is the closer integration of relatively isolated communities.

100. Agreement was reached during loan negotiations on the points men-tioned below:

a) design st,andards for the project roads (paragraph 43);

b) procurement procedures and contract documentation; thesize of individual construction contrac-ts, and the tenta-tive program of construction (paragraphs 44, 54);

c) the measures to be taken for adjusting the loan amount torevised cost estimates and foreign component (paragraph 53);

d) that the Government would promptly provide adequate fundsand other resources required in connection with the project(paragraphs 53, 68);

e) the highway maintenance equipment items, the accountingmachines and other technical equipment to be purchasedfrom the proceeds of the loan (paragraphs 54,60);

f) the appointment of consulting engineers with appropriateterms of reference for the different categories of projectwork (paragraphs 58, 61-66);

g) the reorganization of the Department of HighIrays along thelines recormmended in the PAS report of 1962 (paragraph 63);

h) arrangements for the collection of statistical data relevantto the economic appraisal of highway projects (paragraph 97).

101. The project is considered suitable for a Bank loan of US$35 millionequivalent; a suitable term would be 20 years with a 5-year period of grace.

ANNEX APage .

THAILAND

NATIONAL HIGHIWAY PROJECT

Assessment of Economic Benefits

I. REDUCED TRANSPORTATION COSTS

A. General

1. The Highway Department in Thailand has only recently startedcompiling statistical data relating to traffic volumes, transportation costs,volumes and values of commodities moved, etc. Existing data are scanty, butnevertheless, are considered sufficient to give some meaningful quantitativeimpression of the economic benefits accruing to the economy from savings intransportation costs over the newly constructed project roads compared withexisting unimproved roads.

B. Vehicle Operating Savings

2. Wgith the assistance of consulting engineers, the Department hasdrawn up a comprehensive table of motor vehicle operating costs at differentrunning speeds on roads with different surface conditions, widths, gradients,curvature, etc. The table is based upon a U.S. AASHO(-) publication ac½pted forconditions and costs in Thailand.

3. Data pertinent to the existing and improved conditions of theproject roads have been extracted from the table and, with some slight adjust-ments based upon additional data collected in the field, are given in Table(i) to this Annex; they are summarized below:

PavedPoor in Good

Road Surface: Earth Gravel Blacktop Condition

Operating Cost: 108.0 93.7 83.6 68.3(-LAoo B3/kin)

4. rThe operating costs above relate to an "equivalent passenger car",the unit into which traffic volumes are converted by the Department for thepurpose of determining design standards (see Table 2) and for reviewingeconomic priorities. Trucks and buses are rated as equivalent to three passen-ger car units, which is within tho: range su--ested by .'/A.SIO for economicc-lc-leti½ns. The costs orc considered rcasona-ly representative of actualconditions on the project roads before anJ after improvement.

5. Toble (ii) of t!lis lxnex dives the operatin- sInrin--s for an equiva-lent c r ir t travel'in- the length of the Droject roads before snd afterimnrovement; the percent -e savings ran-e irom 18'4 to 26;; dependent upon thepresent condition of the various sections.

(K-) AASHO: American Association of State Highway Officials.

ANNEX APage 2

C. Traffic Projections

6. Basic data are insufficient to enable future traffic growth to beestimated by combining individual increases in different traffic categoriessuch as normal, generated, diverted or development. Considerations have beenlimited therefore to only the probable normal traffic growth, perhaps an overlyconservative approach, since after completion of the project, additional traffLcwill undoubtedly be developed by intensified agricultural production or willbe diverted from alternative transport modes.

7. Traffic counts are available at different points along the projectroads for the past two years, but do not provide a sufficient basis for extra-polation. Normal traffic growth over the project roads has been assumed to beslightly higher than the average growth of the country's vehicle fleet takinginto account the relatively greater importance to the national economy of theseroads and the regions they serve compared with others in the highway network.1962 traffic volumes have been projected at a linear rate with absolute annualincrements equal to 10% of the 1962 figures (compared to 9% for the 1962country wide vehicle growth). The resulting growth rates in various yearscompared with the projected country average are summarized below:

1962 1965 1970 1975 1980

Country average (%); 9 7 5 4 332

Project roads (%): 10 72 51 42 32

D. Estimation of Benefits

8. The savings in vehicle operating cost by way of longer life ofvehicles and tires, reduced fuel consumption, fewer repairs, etc., multipliedby the traffic forecast for any one year during the economic life of a projectroad, gives a current measure in that particular year of the benefits occruingto the national economy. Allowance should also be made for any change inannual current expenses such as road maintenance. Here, it has been assumedthat there will be no substantial change in maintenance costs per km - aconservative assumption since any change would probably result in a furthersaving.

9. The annual benefits over a twenty year period (the assumed usefuleconomic life of the improved project roads) have been reduced to presentvalues at a discount rate determined by trial and error such that the cumula.tive totals balance the total capital investment including construction costs,interest, engineering, land, etc. A typical calculation of the internal rateof return for one of the project roads is shoiTn in Table (iii) of the Annex; asummary o-f the data used and tho results of tho 3nalysis are given in Table (iv).

10. Because of the approximate nature of the cost estimates, it isdesirable to consider the effect on the economic justification should con-struction costs increase appreciably. Current cost estimates already include

ANNEX APage 3

a 25% contingency allowance for possible increases; if this allowance wereincreased to about 50% the effect on the economic justification would be asfollows:

Approximate Return on Investment (%)Ref. Section of Road Cost Estimates Cost Estimates

including 25% including 50%contingency contingency

1 Chiengmai - Lampoon 9 7-82 Songkhla - Naradhiwat 15 123 Nakorn Pathom - Prajuab 17 14

II. AGRICULTURAL BENEFITS

A. General

11. The proposed highway project will be an important factor in inducingproduction from the service areas of respective project roads. Limited agri-cultural statistics have been collected by local and foreign experts in theNational Economic Development Board of the Government with a view to assess-ing roughly the amounts and values of the resulting increased production dueto intensification of present production, diversification of crop patterns,and cultivation of new areas. With the information available, the reliabilityof these data is difficult to check, but they are believed to be accurateenough to give an idea of the expected agricultural benefits.

12. Details of areas under crop, gross farm values in 1959 and theexpected increases in 1975, are given in Table (v) of the Annex for the pro-vinces through which each project road passes. The percentage increase inareas under crop does not necessarily reflect the expected increase in grossfarm production due to probable change in crop patterns; generally, values ofproduction will be greater because of the greater incentive to grow the higher-valued perishable and soft produce. The postulated increases and changes inpattern of agricultural production are highly dependent upon the improvement(or construction) of the main trunk roads through the regions considered.

B. Project Roads

Chiengmai - Lampoon - Lampang Highway

13. The climate and soil conditions in the general service area of thisroad are ideal for raising such upland crops as vegetables, fruit, onions,garlic, chili, tobacco, etc., for which there is a large market domesticallyand to a lesser extent for export. Cash crops such as highly perishablefruits (lum-yai) and vegetables appear to be particularly promising as high-income yielding produce for the region.

ANNEX APage 4

1h. Estimates prepared by Government experts indicate that, after theroad improvement and construction, the cultivated area in the Chiengmai -Lampang region wou.d expand over 50% to about 416,QOO hectares by 1975 andthe gross value of agricultural production would increase by about 75% (L)compound per annum) over 1959 values. The estimates appear to be ratherconservative but may be used to illustrate the order of magnitude of resultingbenefits. The latest available figure of the gross value of farm production(1959) is Baht 517 million; taking this as base and assuming 50% of grossproduction to represent net production, a rough calculation suggests that thecumulative current value of the annual increase in net agricultural productionof the region would equal the total cost of highway improvement and construc-tion in less than 9 years. Furthermore, the increase in agricultural produc-tion would be supplemented by increases in industrial output and otheractivities within the service area for whiich no quantitative estimate ispossible at this time,

Songhkla - Naradhiwat Highway

15. The Governmentts program for planting new and re-planting existingareas with rubber trees of an improved quality, and for increasing theefficiency of operation by establishing estate-type management, is expectedto increase substantially the output of rubber from the four provincesbenefiting directly by the construction and improvement of this project road.

16. The current average annual yield per hectare in Uhis region isestimated to be less than 500 kilos; yields from re-planted areas might be ashigh as 1,000 kilos per hectare. Rubber output from the region might welldouble fron its present level of 120,000 tons by the mid-1970's, accompaniedby a fall in the cost of production. lio major problem of marketing theincreased rubber output is expected. The relatively marginal position ofThailand as supplier to the world rubber market improves somewhat the country'sopportunity for successful marketing. Though the third "largest" producerof rubber in the world, Thailand only produces about 9% of the world supply,the other two larger producers, Malaya and Indonesia, accounting for about70M of the total world output.

17. The assumption has been made that the commencement of the projectroad works would stimulate the re-planting and expansion of the rubberproducing areas. Making due allowance for the fact that newly planted rubbertrees do not begin producing for about 7 years, and assuming that 50, ofgross production would represent net production, the increase in net produc-tion of rubber alone would eoual the total cost of road improvement in about10 to 12 years after completion of the improvement works depending upon theprice level of rubber in the world market.

18. The production of other main crops of the area, coconuts and rice,is also expected to increase, while recent study shows promise for palm oilproduction.

ANNEX APage 5

Nakorn Pathom - Prajuab Highway

19. The agricultural produce from the general service area of this pro-ject road consist principally of paddy, fruit, sugar cane, bananas, pineappleand vegetables. The value of production is expected at least to double in a15-year period after completion of the highway improvement, equivalent to anannual growth rate of about 5%. Taking as base the 1959 figure of gross valueof farm production at Baht 570 million approximately, and assuming 50% of grossproduction to represent net production, the increase in net production wouldequal the total cost of improving the highway in about 8 years after completion.

20. The projected increase in production is dependent also on proposedirrigation projects in the area, such as the Bank-financed Petchburi scheme,in addition to the road improvement. It is not possible to assign specificportions of the resulting benefits, one to irrigation and another to highwayimprovement. However, the efficient transportatlon of agricultural productswithin the region and a realization of the full benefits from such irrigationprojects is dependent to a high degree upon the proposed trunk road improve-mnent.

ANNEX (A)

Table (i)

THAILAND

NATIONAL HIGHiAY PROJECT

Estimated Operating Cost of an 'Eqaivalent Passenger Car" 1/

(Satang or 1/100 Baht per km)

Road Surface: Earth Gravel Black Top Pavementin unsatistactory in good

condition condition

Assumed Average RunningSpeed (kmph) 4o 55 55 65

Cost of Operation:

Fuel 36.0 33.5 30.5 27.7

Tires 13.0 11.3 8.5 5.6

Oil 3.3 2.9 2.6 2.0

Maintenance 26.8 21.3 17.3 13.0

Depreciation 18.9 16.6 lo.6 13.0

Drivers' wages 10.0 8.1 8.1 7.0

Total 108.0 93.7 83.6 68.3

(us5.40¢) (4.70) (4.2¢) (3.4¢)

1/ Trucks and Buses are rated equal to three "equivalent car" units.

2/ An allowance equivalent to the cost of driver's and assistant'swages for commercial vehicles with an appropriate weighting forthe average proportion of such vehicles in project road traffic.

THAILAND

NATIONAL HIGItIAY PROJECT

Comparison of Operating CostsBefore and After Project Road Improvement

Unit Cost of Total CostTraffic Origin Operation of Pas- Length of of Operation %

Ref. and Destination Condition senger car (per km) Section per Vehicle-trip Saving(1/100 Baht) (km) (Baht)

1. Chiengmai - Lampoon Before improvement 83.6 27 22.6

After improvement 68.3 27 18.4

Saving 4.2 18%

2. Songkhla - Naradhiwat Before improvement 83.6 107 89.593.7 100 93.7

108.0 50 54.0257 237.2

After improvement 68.3 257 175.5

Saving 61.7 26%

3. Nakorn Pathom - Prajuab Before improvement 83.6 266 222.4

After improvement 68.3 266 181.7

Saving 40.7 18%

CDX

ANNEX (AlTABLE (iii)

THAILAND

NATIONAL HIGHWAY PROJECT

Songkhla - Naradhiwat Highway

Economic Return from Vehicle Operating Savings

Equivalent Annual SavingsDaily Volume Current Discounted Cost of

Year of Traffic/ Value at 15% Improvement -

----------- Baht million -----------

1 1967 '/ 1,900 42.7 42.7 4281968 2,030 45.6 39.61969 2.,160 48.6 36.81970 2,290 51.5 33.9

5 1971 2,420 5h.4 31.21972 2,550 57.3 28.51973 2,680 60.2 26.11974 2,810 63.2 23.81975 2,940 66.1 21.6

10 1976 3,070 69.0 19.61977 3,200 71.9 17.81978 3,330 74.9 16.11979 3,460 77.8 14.61980 3,590 80.7 13.2

15 1981 3,720 83.7 11.81982 3,860 86.8 10.71983 4,000 89.9 9.61984 4,140 93.1 8.61985 4,290 96.5 7.8

20 1986 4,440 99.9 7.0

421.0 428

1/ weighted average over whole length in equivalent passenger cars.

2/ including construction, engineering, land, and 6% interest duringconstruction.

3/ expected year of completion for whole 257 km length; vehicleoperating benefits accruing from partial lengths prior to totalcompletion have not been included.

T,HIIAND

NATIONAL HIGHWAY PROJiCT

Summary of Economic Data

(Vehicle Operating Savings Only)

Traffic Data % Trucks Equivalent Passenger Cars 2

Ref. Road Section Length 1962 Traffic & Buses 1962 1967 1972 198O

1 a) Chiengmai - Lampoon 27 670 57 1,440 2,200 2,950 4,15ob) Lampoon - Lampang 78 0 (70) 0 (6OCL700 C

2 Songhkla - Naradhiwat 257 1,200 -220 55 -85 1,250 1,900 2,550 3,590

3 Nakorn Pathom - Brajuab 266 1,800 - 400 55 - 80 2,500 3,750 5,000 7,000

1 Vehicles per day over different sections.Weighted average over whole length.

7/ The equivalent of 250 - 300 vehicles/day likely after opening.

Financial Data (B million) AssumedRoad Approximate

Above Construction Engineering Interest during Land Total Maint. Internal RateRef, Construction CaDital Savings of Return ()

1 a) 32 3 3 9 47 0 9b) 288 29 41 5 363 - -

2 318 32 48 30 428 o 15

3 337 34 53 37 461 0 17

g/ Statistics inadequate for a meaningful determination.

ANNEX (A)Table (v)

THAILAND

NATIONAL HIGHWAY PROJECT

Past and Projected Agricultural Productionin the Zones of' Influence of the Project Highways

Actual Projected

1959 1975

Provinces Total Area Gross Area under cropBeneiting Land Area Under Farm Value

1,0 100 1,000 1,000 X increasehectares hectares million hectares over 1959

1) Chiengmai - Lampang Highway (105 km)

Chiengmai 2,300 137 302 208 52Lampoon 44° 51 92 83 61Lampang 1,250 79 123 125 58

Total 3,990 267 517 416 56

2) Songhkla - Naradhiwat Highway (257 kcm)

Songhkla 670 167 456 292 79Pattani 200 102 370 167 64Naradhiwat 420 118 505 250 112Yala 470 83 374 208 150

Total 1,760 470 1,705 917 95

3) Nakorn Pathom - Prajuab Highway (266 lcm)

Nakorn Pathom 220 127 176 167 31Ratburi 510 114 233 167 46Petchburi 630 64 78 83 31Prajuab 390 20 85 26 30

Total 1,750 325 572 443 36

ANNEX BPage 1

THAILAND

NATIONAL HIGHWAY PROJECT

Roads to be Studied and Engineered for Future Bank Consideration

A brief description follows of the physical and economic features ofroads included in the project for further study and engineering with a view topossible Bank financing in subsequent phases of the highway construction pro-gram. A tabular summrary of agriculture and traffic data is presented at theend of this Annex.

(1) Prajuab - Chumphorn (171 km)

1. The Governmentts main objective in improving this road is to providea better highway connection with the rich southern regions of Thailand. Theexisting road is narrow and unsurfaced., and is sometimes unusable during partsof the year. Old timber bridges have already been replaced by modern rein-forced concrete structures as part of the USAID - financed bridge replacementprogram. In 1962, traffic volumes ranged from about 350 vehicles per day atthe northern end near Prajuab to about 100 vehicles per day at its southernend; trucks and buses make up about 70% of traffic.

2. The road passes through relatively dry and barren land with Fooragricultural prospects unless irrigated. Some pineapple is grown, but atpresent the produce is carried to local railheads for transport by rail. Fishis the chief produce of this area, particularly around Chumphorn. A fasttruck service to Bangkok would facilitate marketing of the fish, but it wouldseem more logical to consider express refrigerated cars on the railway.

3. The trunk highway network to the south of Chumphorn is under con-struction beyond Ranong, and in the planning stage along the gulf coast.. Thesouthern region may be regarded as potentially the richost in the country, butthe demands for through truck traffic between this region and Bangkok aredifficult to assess on the basis of available data, and need further studytaking into consideration products best transported by the alternative railwayfacility.

(2) Saraburi - Nakorn Sawan (235 km'

h. The feasibility study for the improvement or re-location of this roadwill be undertaken without Bank financial assistance, but final engineeringand design is included in the project. The road is part of the main interna-tional trunk route north from Bangkok to Burma; the section of road northwardfrom Nakorn Sawan to the Burmese border is currently under study with fundssupplied by USAID. In 1962 traffic volumes ranged from about 1,400 vehiclesper day just north of Saraburi to 550 vehicles per day near Nakorn Sawan, withabout 65% to 75% trucks and buses. About 200 km of the present road is poorlypaved and sub-standard in width and alignment; the rest is only roughlysurfaced with gravel.

ANNEX BPage 2

54, This region of Thailand is very fertile and is part of the principalrice producing area of the country; cattle, fruit, and vegetables are secondaryproducts 0 In Decer.ber 1962 the Bank made a loan of US$50 6 million to assist inthe further irrigation of the region, The full realization of benefits deriv-ing from the irrigation project depends to some extent on adequate trunk highwayfacilities for the efficient transportati-on of agricultural produce from theregion.

(3) Loey - Chuinae Khonkaen (215 km)

6s The Loey - Chumphae section (127 km) crosses high ground with manyfertile valleys, a large number of which are not present-ly cultivated. 1962traffic was around 80 to 160 vehicles per day, about 80% of which were trucksand buses.

7. The existing poor road is the only means of transportation for thisarea where production of fruits and vegetables is greatly in excess of require-ments for local consumption; lack of good transportation facilities consider-ably inhibits further development. The area is expected to become the centerof the Governrent's drive to increase production of improved quality cotton.Assuming good road facilities, it is estimated that the cotton product-ionfrom thle area could probably be increased fourfold to about 60,000 tons in a10-year period,

(L) Udorn - Nakorn Panomn (2h4 km)

8. This highway serves a relatively densely populated area where theexisting road is the only means of transportation. The poor quiality of theexisting earth and gravel road hampers communication within the region, andconsequently each cormunity is obliged to maintain a considerable degree ofeccnomic self-sufficiency. 1962 traffic volumes ranged from about 180vehicles per day at the western extremity to about 110 vehicles per day nearNakorn Panom; trucks and buses made up about 80% to 90% of this traffic.

9. The area contains extensive areas of undevelopod Land and enjoys arelatively ample and well-distributed rainfall throughout the year in contrastto the re,st of the north-east region, where concentration of rainfall in ashort rainy season hampers agricultural development. Flood control and irriga-tion projects in the area are in an advanced stage of preparation under thesponsorship of the Mffekong Committee and the Royal Irrigation Department. TheDepartment of Agriculture, with technical assistance from the Colombo Plan, ispromoting a cotton development program which should bring a substantial increaseto the cash income of the provinces served by this road.

(5) Nakorn Srithamaraj - Kantang (162 km)

10. This road cuts across the southern isthmus almost laterally., joiningthe important coastal towns and seaports of Nakorn Srithamaraj on the east coa-,M'and Kantang on the west coast; it serves mostly fertile land, with greatpotential for development of rubber, rice and fruit. Several irrigation pro-jects have recently been started in this area, completion of which wi,Ll re,2iultin more land availaole for cultivation. Tin is an important mining prnduct ofthe area..

AtU~lX F3

11. The condition of the road is poor, but nevertheless traffic vhurx'esin 1962 ranged from a minimum of 250 vehicles per day to about 670 vehiclesper day, about 80% of which were trucks an( buses. The number of shipscalling at Kantang in recent years has numbered over 1,600 annually, about20% of which were foreign-going and the rest coastal, Statistics are notavailable for the larger, more important port of Nakorn Srithamaraj.

THAILAIND

NATIONAL HIGHWAY PROJECT

Agricultural and Traffic Data for Additional Roadsto be Studied and Engineered

Present ana Projectea Agricultural Frocauction

1959 1975

Area under Gross farm Area under Average

Length crop value crop % increase Daily % Trucks

-(km) 1,000 hectares B -m ilion 1,000 hectares over 1959 Trafric ana buses

1. Prajuab-Chumphorn 17 8 55 193 72 30 350-1oo 70

2. Saraburi-Nakorn Sawan 235 -- no data availa'ble - ----------- 1,400-550 65-75

3. Loey-Chumphae-Khonkaen 215 320 385 460 45 80-270 80

4. Udorn-Nakorn Panom 244 510 522 670 32 180-11o 80-90

5. Nakorn Srithamraj-Kantang 162 260 669 440 70 250-670 d0

1,034 1145 1,769 1,642 43

Souroe: Niational Econoric Developmernt Board, Goverm-ent of Thailand.

Source: liational r-icoriorrL Ij rir~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~tr

Table (1)

7:T.-HAILA D

NATIONAL HIGHWAY PROJECT

The ISationn Rhway ystem, 1962

(Dy Regions and Types of Surface; in Kilometers)

r?egion TP?ved Unpaved Tot.al Under Const. Total(Unpaved)

Northern 555 1155 21 537 2,547

Northeastern 207 2,883 3,090 823 3,913

CentraL 1, 297 782 2,079 - 2,079

Southern E445 ____ 1,753 365 2,118

Tota! 2,'C1) 6,428 8,932 1,725 10,657

Source: Department of Highways

THAILAND

NATIONAL HIGHWAY PROJECT

DESIGN STANLARDS FOR HIGHWAYS

(Adopted by the Department of Highways, January 1962)

A n n u a I E q u i v a 1 e n t A v e r a g a D a i l y T r a f f i C V o 1 u m e

Below 100 100 to 400 401 to 1000 1001 to 2000 2001 to 800OMinimum Desirable Minimum Desirable Minimum Desirable Minimum Desirable MLnimum Desirable

CLASS V IV III II I

Design Speed (kph)

Flat (F) 60 - 70 85 80 95 90 105 100 115Topographyl Rolling (N) 45 - 55 70 65 80 75 90 85 100

Mountainous (M) 30 - 40 55 50 65 60 75 70 85

Minimum Radius (m) /F 150 - 200 290 260 360 330 440 400 530

Topography: R 80 - 120 200 170 260 230 330 290 400M 5o - 70 120 100 170 150 230 200 290

Maximm Gradient ( 1) /F 8 5 8 5 7 5 5 4 4 3

Topographyt R 12 7 10 7 8 6 7 6 6 5M 15 10 12 9 10 8 9 7 8 7

Non Passing Sight Distance (m)

F 80 95 95 120 110 140 130 165 150 190Topography: R 60 70 70 95 85 UO 100 130 120 150

M 40 50 50 70 65 85 80 100 95 120Superelevation E - 0.004 V

2/R; Maximum E - 0.10 M/M of Roadway Width

Width of Pavement (m) 4.5 5.0 5.5 6.o 6.o 6.5 6.5 7.0 7.0 7.5Width of Shoulders (i)

TopograpbytF and R 1.0 1.5 1.5 2.0 2.0 2.5 2.5 2.5 2.5 3.0M 1.0 1.5 1.5 2.0 1.5 2.5 1.75 2.5 2.0 2.5

Width of Roadbed (m)

F and R 6.5 8.0 8.5 10.0 10.0 11.5 11.5 12.0 12.0 13.5Topography: M 6.5 8.0 8.5 10.0 9.0 11.5 10.0 12.0 11.0 12.5

Width of Right-of-Way (m) 20 30 30 40 400 60 60 80 60 100

Class of Surface ............... Te…......... / -/(./....... _Intermediate _T -e _

( Laterite or Dast Palliative

(/…Single Surface Treatment_

Suggested Types of Surface /------Douue Surface Tre 0 tmen

( ~ ~ ~~~~~~~/ Penetration Macadam /

H/ Nighway designed for the volume of equivalent passenger cars estimated to exist in the next 15 years. Bus and truck traffic are converted toequivalent, p -en-r cars in the -sti. of one bus or truck equals three passenger cars.

| Based on maximum superelevation of 0.10 meter per meter of width in formula E - 0.004 V2/R (V in kph, R in m, E in mrm)

J Grades to be compensated as follows: " for every 5 degrees of curvature over 30 degrees the ruling grade shall be reduced by 0.1 percent".The degree of curve is defined as the central angle subtended by 100 meter of arc. Example: assumed ruling grade = 6%, the allowableinaximun grade for 40 degree curve is 6.0 - 0.2 - 5.8%.

Source: Planning Division, Department of Highways

T H A I LA N D

HI G HWA Y PROSE CT

Proposed Organization

Department of Highways

|DIECTOR GENERAL|

HIGHWAYW __ ______ _ _____ ___________ _______ _ _EIGRWPLANNING

r __BOARDDEPUTY DIMRCTOR GENERAL FOR ADMINISTiATION DEPU7Y DIRECTOR GENERAL FOB ENG( I -

GENERAL SEBVICES DIVISION t FINANCE DVISIO PBOCURENT DIVISION |ICUT-OF-WAY MATERIAL DIVISION LOCATION k DESIGN PLANNING DIVISION,GENERAL BERVI ~ ~ ~ ~ ~ IDIVISIONi DIVISION

Personnel Management Budgeting & 0 & N Purchasing Land Appraisals, Testing Laboratory Field Surveys Planning &

Records Management I Services Warehousing Negotiation, & Field Tests & Location Programming

Mail & Mesgenger Services I Accounting Contracts and Pre-Qualifi- i Acquisition Inspections Road Design Research & Statistics

Custodial Services | Payrolls & Pre-Audi- cation of Contractors Land Records & Materials Research Bridge & Structure Mapping & Blueprintingting Inventory Control of I Management Design Traffic & Safety

Cash ManagelGent Buildings & Building Legal Services StandardsEquipment Library

DEPUBT DIRECTOR GENERAL FOR OPERATIONS

F- -- --j--

CONSTRUCTION DIVISION 1 MAINTENANCE DIVISION EQUIPMENT DIVISION

Field Layout Maintenance Inspection Shops

Construction a end Supervision Parts Storage and

Supervision Operational Records Supply

Operational Records Equipment Manage-

Contractor Evaluation | aent & Records

snd Performance BuildingReports Maintenance

F I F L D 0 N G A N I Z A T I 0 N

| ~ ~ ~ ~~~ R E A - - -- - --- -- -----O I V I S T E N S

DISTRICT O FF I CS N F IF L D F 0 C E S

> - } ,, | 4 { ! ~~~~~ ~ ~ ~~~~~~~~~~~~~~~~~ource:

Kingdom of ThailandMinistry of Con:unicationsDepartment of Highways

OCTOB1R 1962 ImRD-1068

THAILAND

NATIONAL HIGHWAY PhOJECT

Expenditures (and Appropriations), Department of Highways. 1958-63

(US$ million equivalent)

(excluding financing by USAID)

19 8 1959 1960 1961 2/ 1961/62 2/ 1962/63 2

1 Administration 0.3 1.9 1.4 2.4 (3.2) 4.5 5.9

2 Road Construction 5.1 4.3 4.0 5.5 (7.4) 9.5 (( 17.8

3 Road Improvement 2.9 2.9 1.8 2.7 (3.6) 4.8 (

4 Bridge Construction 0.5 0.8 0.5 0.9 (1.2) 1.0 1.1

5 Toll Roads and Bridges 0.3 0.4 0.4 0.2 (0.3) -

6 Maintenance 4.5 3.9 3.5 4.7 (6.3) 5.6 7.4

13.6 14.2 11.6 16.4 (22.0) 25.4 32.2

/ The relatively low expenditures in fiscal 1960 (only 77% of appropriations)are not considered typical; they are the result of:

a) the fear of a general budget deficit (which did not materialize), and

b) the stringent measures adopted by the newly created Budget Bureau.

aJ In 1961 the fiscal year changed from a calendar year to the period October 1 - September 30.

The figures indicated are for the first 9 months expenditure in 1961; those in parenthesesare prorated for a whole year.

2 Indicating amounts appropriated. (Note: excepting fiscal 1960, expenditures have almostequalled or exeeeded appropriated funds).

Table (5)

THAILAND

NATIONAL HIGHWAY PROJECT

Motor Vehicle Registration, Composition and Growth

1) Registration and Composition

Year Cars Buses Trucks Total (*)

1950 1io1h0 5,000 6,350 21,490

1951 13s830 ( 4 ) 6,640 (23%) 9,3h0 (29%) 28, 810 (100%)

1952 18,L30 7,940 11,550 37,920

1953 22,240 (4975) ,560 (19%) 14,440 (32/) 45,160 (100%)

1o54 19,950 8,250 16,350 414,550

1955 214,290 (18P%) 9,2 40 (19)) 17,330 (335) 50,860O (100%)

1956 27,620 10,730 17,080 55,,4:30

1557 30,e90 ( 49%) 10,950 (17%) 20,670 (335) 62,510 (100%l )

1958 35t,390 1?,390 22,630 70,110

1959 4?,780 (51%) 1?,760 (155) 28,)450 (345') 83,990 (100%)

1960 54,530 12 600 334,880 102,0:10

1961 (*') 5< 805 M )51 13,1490 (12^) 39,560 (375) 108,850 (100%)

roJ ec ted

1965 78,o000 16,000 58,000 152,000

1970 106,000 (52%) 19,000 (9%) 50,000 (39/) 205,000 (100%)

1980 163,000 24,000 125o000 312,000

°) Average Annual Growth Rates (%)

Actual Projected1960 1962 19 6r 1970 1975 1980

Cars 1? 9 7 5 4 312Buses 5 14 31- 3 21 2)LTrucks 16 10 8 5- :4 3y

Total 13 9 7 5 14 31

(*) Excluding motorcycles and motor tricycles, which in 1961 numberedabout 37,000.

Table (6)

THAILAND

NATIONAL HIGHWAY PROJECT

Proposed Eight-Year Highway Development Program, 1963-1970

Anticipated Sources of Fundsor Class of

Ref. Participants in Financing Highway Work Lengith Estimated Total Cost(km) (US$ million)

1 I.B.R.D. ( Improvement and( New Construction 1,662 111 (29%)

2 EXIM Bank Improvement 388 30 (7%)

3 Other lending agencies a) Improvement 648 9 (26%)b) New Construction 728 55

4 USAID Improvements already 462 32 (8%)in hand

v Thai Budget a) Improvements 822 42 Ab) New Construction 731 56 ) (30%)c) Special Projects ? 20 '(political & strategic)

5,441 395 (100%)

1/ Including 10% for engineering and supervision

Source: Department of Highways

Table (7)

THAILAND

NATIONAL HIGWJIAY PROJECT

Tentative Bank Portion of Eight-Year Highway Development Program

Class TotalRef. Road. Section Length of± Road / Construction Cost

(km) (B mill) ($mill)@ 20.8

Phase (1): Present Project

1. Chiengnai - Lampang 105 I, II 320 15.42. Songkhla - Naradhiwat 257 I, II 318 15.33.(a) Nakorn Pathom - Prajuab 266 I, II 337 16.2

Subtotal, Phase (1): 628 975 46.9

Phases (2) and (3): Possible Future Projects

3.(b) Prajuab G Chumphorn 178 II 218 10.54. Saraburi - Nakorn Sawan 3/ 235 I, II 272 13.15. Loey - Khonkaen 215 III 227 10.96. Udorn - Nakorn Panom 244 III 196 9.57. Nakorn Srithmaraj - Kantang 162 II 203 9.8

Subtotal, Phases (2) and (3): 1,034 1,116 53.8

Total Construction 1,662 2,091 100.7

Engineering and Supervision @ 10% 209 10.3

TOTAL 2,300 111.0

1/ See Table (2); ail designs are to the lower or "minimum" standardsin each class.

2/ Including a 25% provision for contingencies.

3/ A feasibility study for an alternative route is included within thescope of the present project; if the alternative route proves justified,the length of this section will increase by about 50 km and the costwill increase by about B 130 million (US$6.3 million).

Table (8)

THAILAND

NATIONAL HIGHWAY PROJECT

Cost Estimate for Typical Road Construction

Project Road: Nakorn Pathos - Prajuab. Total Length: 266 km

Road Section: Rajburi - Petchburi. Section Length: 57 km

1962 Traffic: 1,300 veh/day (67% trucks and buses). Design Standard: Class I (min)

Ref. Item of Work Unit Quantity Unit Price (B) Cost (B mill)

1 Unclassified excavation cu. m. 300,000 22 6.6

2 20 cm. laterite sub-base cu. m. 142,000 60 8.5

3 20 cm. gravel or crushed rook base cu. m. 142,000 125 17.8

4 5 cm. asphaltic concrete surfacing sq. m. 399,000 50 20.0

5 604100 cm. diameter pipe culverts lin.m. 2,800 500 average 1.4

6 Reinforced concrete bridges Recently completed with USAID funds -

Sub-total 54.3

7 10% provision for miscellaneous items 5.4(clearing, grubbing, overhaul, signs, etc.) 59.7

8 25% contingency allowance 14.9

Total Construction Cost 74.6

9 Engineering, contract documentationand construction supervision .... @.. 10% construction cost 7.5

10 Land (assumed 20 m. widening @ B 7 per m2 - 57,000 x 20 x 7) 8.o

Total Construction, Engineering and Land Costs 90.1

Source: Department of Highways

THAILAND

NATIONAL HIGHWAY PROJECT

Estimated Costs of Construction

Probable Annual Requirements (B mill) TotalRef. Road Section Length Class 1963 1964 1965 1966 1967 Cost

(k ) - -

1 a) Chiengmai - Lampoon 27 I - - 16 16 - 32

b) Lampoon - Lampang 78 II - 72 72 72 72 288

Subtotal: 105 _ 72 88 88 72 320

2 a) Songkhla - Klong Ngae 53 I - - 30 30 16 76

b) Kiong Ngae - Naradhiwat 204 II - 60 61 61 60 242

Subtotal: 257 - 60 91 91 76 318

3 a) Nakorn Pathom - Huahin 175 I - 60 60 60 45 225

b) Huahin - Prajuab 91 II - 16 32 32 32 112

Subtotal: 266 - 76 92 92 77 337

TOTAL: 628 - 208 271 271 225 975 (B mill.)

LOCAL COMLFONENT: _ 114 149 149 124 536 (B mill.)

FOREIGN COI'PONENT: - h.5 5.9 5.y) 4.8 21.1 ($ mill.)

CD

fcbJ.e (";

THAILAID

NxIATIONAL HIGT4AY PROJECT

List of Maintenance Equipment Required

No. Estimated Cost EstimatedRef. Specification Required C.I.F. Bangkok Total CosI

(USm per unit) (

1 Motor grader, 12' blade 115 H.D. class 35 15,200 427,ooo2 Tractor crawler D 7 class w/Bull grader

and rear P.C.U. 2 32,000 64,0003 Light rubber-tired tractor, 50 H.P. class 331 2,400 7594,400b. Rubber-tired roller, towtype 13 w.heel or

equivalent (to be matched with Item 3) 56 2,200 123,200,5 Rear blade Frading unit (to be matched with

Item 3) 100 750 '56,ooo6 High-Teay Mower, reciprocating blade type,

general purpose, 4? size (to be matchedwith Item 3) 175 800 140,000

7 Eighway 1Mlower, rotary rear unit (to bematched with Item 3) 175 1000 17;5,00

8 Asphal-ic Concrete iiixing plant portable20 .2m.:. 12 32,000 384,0oc

9 Asphaitic Concrete Mixing plant portable8 T.P]H 38 6,coo 220),0orO

10 Rotavy tiller (Pulvinixer) self propelled 6 24,00 1)44,00011 PneumatLc fronL. end loader 1 - yd. bucket 6 14,0CO 64,Cco12 Rotary broom, tow-type, 61 broom 6 2,400 :14,hOo14 Asphalt Distributor 1000 U.S. gallons,

truck mounted 36 14,000 504, 000l5 Asphalt kettle 400 U.S. gallons (to be

used with Item 14) 144 2,000 288,90016 Dump truck 5 yds. capacity- 24 14,000 336,o00

117 Aggregate Box spreader 6 2,400 14, Ito]9 Flat bedtruck 4 5 T 200 4,000 800,O0O20 Pick-up truck 170 3,200 544,o0o21 I;ater truck 1000 U.S. gal. capacity 60 6;40r 384,00o22 Concrete mixer 9 cu.ft. 12 1,200 14,40023 Striping M1achine, self contained unit,

truck mounted 12 11,2C0 134,4002, Traffic counter, pulsatirg-type 165 800 126,0026 Station wagon, 4-wheel drive 68 4,,8o0 26

Sub-Total 5,990,200

Allow 15,2 approximately for SpareParts and Contingencies CO9,^

TOTAL: USq6,6C00ono

THAILLN)

NATIONAL HIGH_vAY PROJECT

Estimated Costs of Engineering and Training

(A) FOREIGN AND LOCAL COIMPONENTSE n g i n e e r i n g C o s t

Road Ref.No. Construc- As % of Foreign Local Foreign LocalRef. Item (Table 7) tion Cost Const.Cost Component Component Cost Cost

1 a) Engineering and contractdocumentation 1,2,3(a) 46.9 a) 5 75% 25% l.b 12

b) Construction supervision 1,2,3(a) 46.9 b) 5 5o% 50% 1.2 24

2 Engineering, interim reports,and contract documentation 3(b),4,5,6,7 53.8 6 75% 25% 2.3 16

3 Advisory services - - Assumed 72 man-months average per 0.5 3year for 2 years

4 Technical Training - - Assumed 6 - 8 persons annually 0.1 2over 2-year period for a

course outside Thailand _

TOTALS 5,9 B 56

(B) ESTIMATED ANNUAL REQUIRi14ENTS

1963 1964 1965 1966 1967 TotalForeign Local Foreign Local Foreign Local Foreign Local Foreign Local Foreign Local

(US$ mill) (B mill)

1.5 12 1.7 17 1.3 12 0.7 8 o,y 5.9 56

I-

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00 \; K O~~~ANKO9

j~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~BD 1087egb ,

I iSChumpo~~rn

f t' ', 9 ~~~~THAILAND

0- 0 ~~~POLITICAL AND PHYSICAl

tt ¢ Srith9mrtti < ~~~~ELEVATIONS

2 g \ ~~~~~~~~~~1 5 00 _200 D 49Z1 _ 6 562j

0~ ~ ~ ~ ~rn $\ W _ Q \000-IO 656-3281-4

< L \ X~~~Songkhhl o:a 5638

<;'P\.L S Scrs~No,dhiwat Ht= 25 5 7 :,K.

X 9-!n e@-;'x, > ~ ~~~~~~ 25 .5 75 t OOMi

IBRD-1087

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